Updated: 2026-02-20
In trading, Mark price is a fair-value reference price calculated by the exchange from index price and a decaying funding basis, used to determine unrealized PnL, margin requirements, and liquidation triggers on perpetual futures. This glossary entry explains why mark price matters, how traders use it, and how to track it with evidence instead of vibes.
Quick definition
Mark price: a fair-value reference price calculated by the exchange from index price and a decaying funding basis, used to determine unrealized PnL, margin requirements, and liquidation triggers on perpetual futures.
Mark price is a fair-value reference price calculated by the exchange from index price and a decaying funding basis, used to determine unrealized PnL, margin requirements, and liquidation triggers on perpetual futures. The practical version is: can you define it as a field you can log and audit later?
Most trading terms become confusing when they are used as vibes instead of variables. Your goal is a definition that helps you decide size, stop, entry timing, or whether to skip the trade.
Traders sometimes confuse Mark price with index price. Treat them as separate variables in your journal so your reviews stay honest.
Your chart shows last traded price, but the exchange risk engine uses mark price to decide if you get liquidated. During volatile wicks on thin order books, last price can spike 1-2% away from mark price. If you manage risk by watching candlesticks alone, you can feel 'safe' while the exchange is already counting down to your forced exit. Mark price is what actually matters for your margin math.
If Mark price never changes your decision, it is just jargon. The term earns its place when it improves your process consistency under real market pressure.
A useful mental model: plan first (risk and invalidation), execute second (order type and fills), review last (tags and metrics).
Use it to make one decision pre-trade. Example decisions: where the stop goes, whether to take partials, how to scale size, or whether conditions are too thin to trade.
Write the rule in one sentence, then run it consistently for a week. Consistency matters because it creates comparable data for review.
If the rule fails, adjust slowly. Do not rewrite the whole system after one bad session.
Note in your journal which price your venue uses for liquidation (almost always mark price on Binance, Bybit, OKX). During volatile sessions, log the max divergence you observed between last price and mark price. If divergence regularly exceeds 0.5%, factor that into your liquidation buffer — your effective safety margin is smaller than the chart suggests.
Use tags so you can slice results by regime and behavior state. The same term behaves differently when volatility changes or when you are fatigued.
Your review question should be binary: did this variable improve outcomes or reduce rule breaks? If not, simplify.
You are long SOL-USDT perp at $145 with 15× leverage. Liquidation based on mark price is at $135.50. During a flash crash, last traded price wicks to $136.80 and bounces. Your chart says you survived. But mark price, which uses the composite index across Coinbase, Kraken, and Binance spot, dipped to $135.20 — below your liquidation. The exchange closed your position even though the perp order book never printed $135.50.
The point of an example is not to predict price. It is to show what you would log before the trade and what you would audit after the trade.
Placing your stop-loss based on chart candles (last price) without realizing that liquidation is triggered by mark price — then getting liquidated on a wick that never shows on your candlestick chart.
The fastest way to improve mark price is to remove one failure mode at a time. If you try to fix everything, you will fix nothing.
Mark price interacts with exchange mechanics: margin mode, mark/index rules, and funding/fees. If you ignore those, your backtest brain will lie to you.
In derivatives, survivability is first. Treat liquidation and forced exits as unacceptable outcomes, not as 'just a bigger stop'.
Your journal should separate: price-move PnL, fees, funding, and execution quality. Otherwise you can't tell what actually caused the outcome.
Mark price is a fair-value reference price calculated by the exchange from index price and a decaying funding basis, used to determine unrealized PnL, margin requirements, and liquidation triggers on perpetual futures. In practice, it matters when it changes a concrete decision like size, stop placement, or whether you skip a trade.
They are related but not identical. In your journal, track Mark price as its own variable and treat index price as a separate context factor so you can audit each cleanly.
Note in your journal which price your venue uses for liquidation (almost always mark price on Binance, Bybit, OKX). During volatile sessions, log the max divergence you observed between last price and mark price. If divergence regularly exceeds 0.5%, factor that into your liquidation buffer — your effective safety margin is smaller than the chart suggests.
Placing your stop-loss based on chart candles (last price) without realizing that liquidation is triggered by mark price — then getting liquidated on a wick that never shows on your candlestick chart.
See plans and run one weekly review loop with Tiltless: edges, leaks, and enforceable next actions.
